Despite this year having been the worst year of growth for the global economy in the past 40 years, and with sub-Saharan Africa facing its first recession in 25 years with a 3.1% gross domestic product (GDP) contraction expected, there remains a strong case for a rebound, as international institutions have committed a significant amount of resources to Africa's economic recovery, The European House – Ambrosetti CEO Valerio De Molli has said.
For example, the European Union (EU) has committed almost €40-billion toward recovery in Africa, while the African Development Bank committed around €10-billion, the World Bank €135-billion, the International Monetary Fund €2.7-billion and the Africa Export-Import Bank around €3-billion.
All these resources combined make up 8% of the continent’s GDP.
Particularly, South Africa ranks as the most attractive country in Africa in the Global Attractiveness Index Africa 2020 report, which is the first statistical tool to measure economic attractiveness in Africa.
De Molli spoke during the seventh edition of the Southern Africa-Europe CEO Dialogue, held this week.
The event once again brought together world-leading think tanks, key decision-makers and influential business leaders, governments and scholars from Southern Africa and Europe to discuss the opportunities for the regions’ trade relationship post Covid-19.
Italy Foreign Affairs and International Cooperation Deputy Minister Emanuela Del Re told delegates participating in the event that, besides South Africa being a key political partner for Italy, it is also its most important economic and commercial partner in sub-Saharan Africa.
“Yet, both our governments recognise the existence of a huge untapped potential that it is our duty to unleash. We value South Africa’s infrastructure and the most developed network on the continent guarantees accessibility and connectivity, as well as an efficient distribution on a regional scale, starting with the fifteen countries of the Southern African Development Community (SADC),” she added.
Del Re said her government intended to build on and reinvigorate its multifaceted relations on every level, be it political and economic, or scientific and cultural, which she said were sectors in their view that were instrumental to establish a wide-ranging strategic partnership.
“By looking at the way South Africa acts in the global arena, I believe there are clear common grounds on which our nations operate in global affairs: protection of the environment, sustainable development, internal security, the fight against terrorism, and the promotion of good governance.
“As a founding member of the EU, Italy is engaged in strengthening the already good relations between Bruxelles and Pretoria, who are both convinced supporters of free and fair trade, human rights and democracy.
“The EU and South Africa are key partners as they share common values and principles such as the commitment to reinforce multilateralism, peace, sustainable investment, and the fight against climate change,” Del Re explained.
She added that, while the global economy had been battered by the devastating effects of Covid-19, the two regions needed to be prepared for the post-Covid phase.
“Despite the crisis, indicators show that there will be opportunities in economics. Partnerships like ours can make a difference. Italy’s presidency of the Group of Twenty Summit in 2021 will be a unique opportunity to work together with Africa in addressing global challenges,” Del Re pointed out.
South Africa, as the “main voice” of Africa, will have the opportunity to bring to the table at the summit the main issues of the continent, including sustainable development and youth and women empowerment, which are also priorities for many European countries.
Del Re explained that the forward-looking economic reforms put in place by South African President Cyril Ramaphosa, together with the implementation of the African Continental Free Trade Agreement (AfCFTA), should bring about economic benefits for both Africa and Europe.
Meanwhile, in his address to delegates of the CEO Dialogue, World Health Organisation director-general Tedros Ghebreyesus said that, while Africa had so far averted the worst health effects of the Covid-19 pandemic, the social and economic consequences had been severe.
Despite being home to 16% of the world's population, Africa recorded only 3.6% of global Covid-19 cases and 3.6% of total deaths.
“The response to the pandemic has often been framed as a choice between health and the economy. That is a false choice. Health and the economy are integrated and interdependent. It is time for a new narrative.
“We cannot go back to business as usual. Health is not a ‘cause’. It is an investment in stability, productivity and security, it is an investment in the future,” said Ghebreyesus.
Adviser to Cyril Ramaphosa, Trudy Makhaya, said business confidence was steadily increasing in South Africa, as evidenced by the R110-billion in pledges committed during the third annual South African Investment Conference.
“The investment climate requires government to become an active participant in eliminating barriers to trade. Even in the midst of the Covid-19 pandemic, only 10% of projects previously committed to at previous investment conferences are under strain and 90% of the value of the investments are still being made and in the implementation phase, which is encouraging.
“We need to reboot the economy and the recovery will be infrastructure-led, which is what makes collaborations such as the Southern Africa-Europe CEO Dialogue so important,” said Makhaya.
Gauteng Premier David Makhura in his address spoke about how the pandemic had taught the world one basic lesson − that human solidarity and multilateralism constitute the best approach to handling any civilisational existential crisis.
“We need a collective response to the existential threat posed by Covid-19 and the civilisational crisis caused not only by the pandemic, but also by a global economic system that – as the pandemic has highlighted - excludes billions of people from earning decent livelihoods, and renders those billions economically vulnerable in ways that cannot be sustained,” Makhura noted.
De Molli further remarked on the collapse of Italy’s trade with all major countries this year and said that the total loss in trade between SADC countries and the EU was €14-billion.
But, Italy’s trade toward SADC countries performed better than the EU average, showing that despite the adverse scenario, Italy’s outlook on South Africa and the region remained positive.
“Covid-19 did not undermine the long-term fundamentals of trade with the African continent. Multilateral financial institutions have committed significant resources to help Africa overcome the crisis.
“The AfCFTA will boost South Africa’s role as a continental economic powerhouse. The current crisis can boost investment in digitalization, allowing Africa to leapfrog towards new technologies and business models,” said De Molli.